mu
BASICS
A MODULAR RPPROAGH
Ma Ray Balsa, 284
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TEModule 7
Distributing Products
Objectives:
At the end of this module, students are expected to:
1. define product distribution;
2. differentiate wholesaling from retailing and identify
their functions;
3. identify the distribution strategies used by
companies; and
illustrate the levels of distribution.
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Philippine Copyright 2014 Rex Book Store Inc. All Rights Reserved. No part ofthis Learning Device may be
permission from Rex Book Store, IncOne of the important decisions — that
management faces is determining which
marketing channel to use. Product distribution
is a critical factor in the efficient distribution of
products from the manufacturer to the final
users of the products. The objective of any
product distribution is to get the right quantity
of goods at the right place and right time with
the least possible cost.
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permission from Rex Book Store, IncPhysical distribution of products and logistics
deals with the same activities. These consist of
materials handling, order processing,
warehousing, transportation, and inventory.
Logistics is concerned with materials
management and_ physical distribution.
Physical distribution links manufacturing and
customers, while material management
focuses on the link between the supplier and
the manufacturing.
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REDistribution Channels
Marketing intermediaries compose the
distribution channel. They are people who serve
as the link between the firm or manufacturer and
the market. Some examples of intermediaries are
sales agent, advertising agencies, wholesalers,
and retailers. They perform tasks such as
purchasing, storing, selling, and transporting
products.
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TEWholesaling intermediaries are those that
purchase products from manufacturers and
sell these products to retailers and other
industrial users. Retailers, on the other hand,
are those that purchase products and resell
them to final users or market for their own use.
Retailing is the final stage in the channel of
distribution.
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permission from Rex Book Store, IncPhysical distribution of products starts
when there is order from customers. How
to handle such order in terms of quantity,
date of delivery, speed, price, and mode
of transportation to use are the concerns
of the distributors.
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1. Zero-level Channel. From the manufacturer,
products reach the market directly. This is
also known as_ direct marketing. No
marketing intermediaries or distributors are
needed.
2. One-level Channel. Before products reach
the market, products pass through marketing
intermediaries either through the wholesalers
or retailers.
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permission from Rex Book Store, Inc3. Two-level Channel. This consists of two
channels of distribution where products pass
through before reaching the end users.
These channels are the wholesalers and
retailers, respectively.
4. Three-level Channel. Products from the
manufacturer pass through three middlemen
or channels—the manufacturer’s — selling
agent, to wholesaler, and to retailer before
the products reach the market.
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reproduced or distrbuted in any form or by any means, or stored ina database retrieval system without prior
mission from Rex Book Store, IncDistribution Strategy Used by
Companies
1. Intensive Distribution. Firms place products
in as many outlets as possible, be it in
supermarkets, department stores,
convenience stores, hotels, and hospitals,
among others. This makes the products
accessible and available to all consumers
anytime, anywhere.
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Distribution. Products are
distributed in a limited number of outlets.
Companies develop close business
relationship with selected channels.
. Exclusive Distribution. \|n this type of
distribution, an outlet is given exclusive rights
to carry the manufacturer's products within a
specific territory. This set-up is not convenient
to the customers because they have to go to
that particular outlet where products are
distributed or being sold. Although in exclusive
distribution, competition is less.
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reproduced or distrbuted in any form or by any means, or stored ina database retrieval system without prior
permission from Rex Book Store, Inc. _Wholesaling and Retailing
Wholesaling involves transaction where
products are sold for resale.
The person involved in wholesaling is
called the wholesaler.
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raeOther functions of wholesalers are:
1. They buy in large quantities and break these
into smaller numbers for resale to retailers.
2. They provide product knowledge to the
retailers as they promote and sell the
products.
3. They provide the manufacturer the
necessary feedback or market information
about his product.
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permission from Rex Book Store, Inc. They handle the storage of the products.
5. They carry the inventory of the
manufacturer’s products.
6. They provide their own sales agents so that
it helps the manufacturer with minimizing
manpower cost.
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permission from Rex Book Store, IncRetailing is the process of selling products to
the end users. Retailing is the last stage in the
channel of distribution.
The person involved in retailing is called the
retailer.
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permission from Rex Book Store, IncRetailing is an important industry because:
1. It helps the economy by creating jobs or
providing employment.
2. Majority of the market patronizes retail
purchases.
3. It serves as_ links between the
wholesalers’ products and the customers.
4. It sells products that end users can afford.
5. Retail stores are commonly accessible to
the market.
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permission from Rex Book Store, IncClassification of Retailers
a. Self-service is the type used by sellers
in convenience stores.
b. Full-service stores offer more choices
of specialty products providing more
services to customers; thus, operating
expenses are high which result in higher
product price.c. Limited-service retailers carry more
shopping goods; therefore, providing more
sales assistance for customers who need
information about a product.
d. Personal-service retailers provide
personalized service to consumers. Personal
services and facilities given to the customer
build up goodwill and increase the volume of
sales, as well as profit.
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f
iPhilippine Copyright 2014 Rex Book Store Inc. All Rights Reserved. No part ofthis Learning Device may be
reproduced or distributed in any form or by any means, or stored ina database retieval system without prior
permission from Rex Book Store, Inc